Flip­kart Eyes Com­fort Zone in Fur­ni­ture Mkt

Co sets an am­bi­tious tar­get of 15-fold growth in this high-value cat­e­gory

The Economic Times - - Disruption: -

Mad­hav Chan­chani & Aditi Shri­vas­tava

Ben­galuru: Flip­kart has set its sights on be­com­ing In­dia’s largest fur­ni­ture re­tailer by the end of this year with an am­bi­tious tar­get to reg­is­ter a 15-fold growth in the high-value cat­e­gory, which also prom­ises to de­liver healthy prof­its.

The nine-year-old com­pany has so far re­lied pri­mar­ily on cat­e­gories such as elec­tron­ics, mo­biles and ap­parel to fuel its rapid growth.

This year, the need to tem­per growth with prof­its has led the Ben­galuru-based com­pany to seek out newer prod­uct cat­e­gories like home fur­nish­ing and au­to­mo­biles that de­liver both large trans­ac­tion size and mar­gins. Launched just six months ago, fur­ni­ture is now one of the top cat­e­gories for Flip­kart as it squares up to stiff com­pe­ti­tion from spe­cialised por­tals such as Ur­ban Lad­der and Pep­perfry. Also in the fray is Kishore Biyani’s Home­town, which re­cently ac­quired Rocket In­ter­net-owned Fabfur­nish to build an ‘om­nichan­nel strat­egy’,which in­volves sell­ing both on­line and off­line.

“We have just scratched the sur­face,” said San­deep C Patil, a se­nior di­rec­tor at Flip­kart, who claims his com­pany is now among the top five fur­ni­ture re­tail­ers in the country. He de­clined to share spe­cific sales fig­ures but in­di­cated that the com­pany would tar­get growth by fo­cus­ing on its bank of 75-mil­lion reg­is­tered users. “Fur­ni­ture is a $20 bil­lion mar­ket, which is big­ger than the mo­bile phone mar­ket,” said Patil. Flip­kart could be aim­ing for fur­ni­ture sales of up to $ 400 mil­lion or .₹ 2,600 crore on its plat­form by the end of 2016.

ET had ear­lier re­ported that Nor­west Ven­ture-backed Pep­perfry ex- pects to post growth of at least 150% in fis­cal 2017, af­ter end­ing this year with a gross mer­chan­dise value of .₹ 1,000 crore.

Ur­ban Lad­der ex­pects to hit net rev­enues of .₹ 1,300 crore this year, while a Fu­ture Re­tail spokesper­son said that the com­pany ex­pects Home­town and Fabfur­nish to gen­er­ate busi­ness of .₹ 800-1,000 crore by the end of fis­cal 2017.

“Right now ver­ti­cals are big­ger than hor­i­zon­tals in the cat­e­gory, but even af­ter launch­ing in Oc­to­ber we are quite close to them in size,” said Patil. “If our pro­jec­tions hold, we will be mul­ti­ple in size of ver­ti­cals.” The com­pany aims to also seal exclusive on­line tie-ups with brands like Go­drej Interio and get in­ter­na­tional se­lec­tion.

There is good rea­son why re­tail­ers are hon­ing in on this high growth, high-value cat­e­gory. The av­er­age sale price for items of fur- ni­ture is around .₹ 15,000-.`20,000 while items for home, in­clud­ing pots and pans, sell for an av­er­age of about .₹ 1,000. In a re­cent re­port, in­vest­ment firm Mor­gan Stan­ley pre­dicted that fur­ni­ture and home fur­nish­ing will be the next big cat­e­gory for large hor­i­zon­tal ecom­merce com­pa­nies, as it is a highly frag­mented busi­ness with small off­line play­ers. How­ever, man­ag­ing lo­gis­tics and the sup­ply chain are the key pain points in this cat­e­gory, the re­port cau­tioned.

Flip­kart, a late en­trant will have to also con­tend with the head start gained by ri­vals like Ur­ban Lad­der and Pep­perfry that have built welloiled lo­gis­tic net­works. Flip­kart has started en­gag­ing with in­vestee com­pany Jeeves Consumer, which un­til now pro­vided af­ter sales ser­vice for elec­tron­ics and home ap­pli­ances, but is now be­ing roped in to help in­stall large fur­ni­ture.

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